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Middleburg Financial Corporation Announces Fourth Quarter 2013 Results

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SOURCE Middleburg Financial Corporation

MIDDLEBURG, Va., Jan. 31, 2014 /PRNewswire/ -- Middleburg Financial Corporation (the "Company") (Nasdaq: MBRG), today announced net income of $1.49 million for the quarter ended December 31, 2013, or $0.21 per diluted share and net income of $6.52 million for the full year 2013, or $0.92 per diluted share.

"Middleburg Financial Corporation continued to move forward in 2013, with positive trends in deposits, loans, trust and investment services income, as well as net income," commented Gary R. Shook, president and CEO of the Company. Moreover, non-performing assets, which have been a drag on earnings performance over the past several years continued to decline throughout 2013. Net income for the Company grew slightly in 2013 even with the headwinds faced by the significant decline in mortgage refinance activity. As mortgage revenue declined and compliance costs continued to rise, we addressed operating costs by adjusting our staffing levels, including the elimination of senior management positions, all of which were reflected in the earnings for the fourth quarter."

Fourth Quarter 2013 Highlights:

  • Net income of $1.49 million or $0.21 per diluted share for the quarter ended December 31, 2013, an increase of 4.79% compared to the fourth quarter of 2012 and $6.52 million or $0.92 per diluted share for 2013, an increase of 0.54% over the previous year;
  • Net interest margin of 3.43%, compared to 3.33% for the previous quarter and 3.42% for the fourth quarter of 2012;
  • Total revenue decreased 2.85% to $15.01 million for the fourth quarter 2013 compared to the previous quarter and decreased 14.37% compared to the fourth quarter of 2012;
  • Total assets were $1.23 billion as of December 31, 2013, relatively unchanged from December 31, 2012;
  • Total deposits were $982.40 million as of December 31, 2013, an increase of 0.05% compared to December 31, 2012;
  • Loans held-for-investment were $728.48 million as of December 31, 2013, an increase of 1.73% compared to September 30, 2013 and an increase of 2.68% compared to December 31, 2012;
  • Southern Trust Mortgage closed $138.49 million in mortgage loans during the fourth quarter 2013 compared to $249.20 million in mortgage loans closed during the fourth quarter 2012, a decrease of 44.43%;
  • Asset quality continues to improve with a ratio of non-performing assets to total assets of 2.33% at December 31, 2013 compared to 2.51% at September 30, 2013 and 3.05% at December 31, 2012;
  • Capital ratios continue to be strong: Tangible Common Equity Ratio of 8.76%, Total Risk-Based Capital Ratio of 15.88%, Tier 1 Risk-Based Capital Ratio of 14.62%, and a Tier 1 Leverage Ratio of 9.42% at December 31, 2013.

Total Revenue

Total revenue, which is comprised of net interest income (before the provision for loan losses) and non-interest income, was $15.01 million for the quarter ended December 31, 2013, representing a decrease of 2.85% compared to the previous quarter and a decrease of $2.52 million or 14.37% from the quarter ended December 31, 2012.

Net interest income was $9.61 million during the quarter ended December 31, 2013, an increase of 3.11% compared to the previous quarter and an increase of 0.60% compared to the quarter ended December 31, 2012. While loan yields in the fourth quarter of 2013 were pressured by intense competition and weak demand from qualified borrowers, securities yields increased as prepayments on mortgage securities slowed in response to the increase in mortgage rates.  Our cost of funds declined throughout 2013 due to maturing high cost time deposits and lower rates for non-interest bearing deposits.  The yield on average earning assets was 3.94% for the quarter ended December 31, 2013 compared to 3.89% for the previous quarter and 4.08% for the quarter ended December 31, 2012.  Loan yields decreased by 6 basis points while the yield of the investment securities portfolio increased by 13 basis points when comparing the quarter ended December 31, 2013 to the previous quarter.  Loan yields decreased by 27 basis points while the yield of the investment securities portfolio increased by 17 basis points when comparing the quarter ended December 31, 2013 to the same calendar quarter in 2012.    

The average annualized cost of interest bearing liabilities was 0.66% for the quarter ended December 31, 2013, compared to 0.71% in the previous quarter, and 0.82% for the quarter ended December 31, 2012, representing a decrease of 5 basis points from the previous quarter and a decrease of 16 basis points from the quarter ended December 31, 2012.  Annualized costs for interest bearing retail deposits decreased by 6 basis points from the previous quarter to 0.55% from 0.61% and decreased by 17 basis points from the same quarter last year.  The decline in the annualized cost of interest bearing retail deposits from both the previous quarter and the same quarter last year was due to reduced interest expenses broadly across deposit categories, including interest checking, savings and time deposits.  The annualized cost for wholesale borrowings (excluding brokered deposits) was 1.45%, which was an increase of 12 basis points compared to the previous quarter and a decrease of 2 basis points compared to the quarter ended December 31, 2012. 

Cost of funds is calculated by dividing annualized total interest expense by the sum of average interest bearing liabilities and average demand deposits. Cost of funds was 0.55% for the quarter ended December 31, 2013 compared to 0.59% for the previous quarter.  Cost of funds for the fourth quarter of 2013 decreased 14 basis points compared to cost of funds for the quarter ended December 31, 2012.

The net interest margin for the quarter ended December 31, 2013 was 3.43%, compared to 3.33% for the previous quarter, and 3.42% for the quarter ended December 31, 2012.  Management continues to reduce funding costs, where possible, to produce a stable net interest margin given the continued low interest rate environment.  

The Company's net interest margin is not a measurement under accounting principles generally accepted in the United States, but it is a common measure used by the financial services industry to determine how profitably earning assets are funded. The Company's net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets.  Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34.0%. Details on the calculation of the net interest margin are included in the "Key Statistics" table.

The following table presents components of non-interest income for the three month periods ended December 31, 2013, September 30, 2013 and December 31, 2012:

Non-Interest Income

(in thousands)



For the three months ended




December 31,


September 30,


December 31,



2013


2013


2012

Service charges on deposit accounts


$

593



$

590



$

572

Trust service income


1,033



963



923

Gains on loans held for sale


3,114



4,162



5,926

Net gains (losses) on securities available for sale


22



23



(7)

Commissions on investment sales


107



159



129

Fees on mortgages held for sale


-



28



43

Bank owned life insurance


104



125



96

Other operating income


430



78



299

Total non-interest income


$

5,403



$

6,128



$

7,981

Non-interest income decreased by 32.30% in the fourth quarter of  2013, compared to the quarter ended December 31, 2012. Gains on mortgage loan sales decreased by 47.45% when compared to the quarter ended December 31, 2012.  The decline in gains on mortgage loan sales was due to the decline in originations as higher mortgage rates reduced borrower demand for mortgage refinancing and for mortgage loans to purchase homes.  Gains on mortgage loan sales included in the accompanying statements of income are presented net of originator commissions incurred to originate the loans.

Our mortgage subsidiary, Southern Trust Mortgage, closed $138.49 million in mortgage loans during the quarter ended December 31, 2013 compared to $189.48 million closed during the previous quarter, and $249.20 million closed during the quarter ended December 31, 2012, a decrease of 26.91% compared to the previous quarter and a decrease of 44.43% compared to the fourth quarter of 2012.  Due to the decline in mortgage loan originations, Southern Trust Mortgage continues to take measures to reduce overhead in order to align expenses with the decline in loan originations and lower revenue from mortgage loan sales.  These measures include a continued reduction in personnel and planned reductions in expenses throughout the mortgage company.  

The revenues and expenses of Southern Trust Mortgage are reflected in the Company's financial statements on a consolidated basis following generally accepted accounting principles in the United States.  The outstanding equity interest not held by the Company is reported on the Company's balance sheets as "non-controlling interest in consolidated subsidiary" and the earnings or loss attributable to the non-controlling interest is reported on the Company's statements of income as "net (income)/loss attributable to non-controlling interest."

Total revenue generated by our wealth management group, Middleburg Investment Group ("MIG") was $1.14 million for the quarter ended December 31, 2013, an increase of 8.57% from the quarter ended December 31, 2012. Middleburg Investment Group is comprised of Middleburg Trust Company, a wholly owned subsidiary of the Company and Middleburg Investment Services, which is a division of Middleburg Bank.  Fee income is based primarily upon the market value of the accounts under administration. Total consolidated assets under administration by MIG were $1.55 billion at December 31, 2013 and $1.49 billion at December 31, 2012.

Other operating income was $430,000 during the quarter ended December 31, 2013, compared to $299,000 during the quarter ended December 31, 2012.  Other operating income includes credit card fees, data processing fees and other miscellaneous income during the reporting period.  

The following table presents components of non-interest expense for the three month periods ended December 31, 2013, September 30, 2013 and December 31, 2012:

Non-Interest Expense

(in thousands)



For the three months ended




December 31,



September



December 31,



2013



2013



2012

Salaries and employee benefits


$

7,385



$

7,750



$

8,278

Net occupancy and equipment expense


1,857



1,820



1,785

Advertising


436



318



635

Computer operations


485



456



471

Other real estate owned


79



416



55

Other taxes


186



186



202

Federal deposit insurance expense


139



149



269

Other operating expenses


2,635



2,210



2,103

Total non-interest expense


$

13,202



$

13,305



$

13,798

Total non-interest expense in the fourth quarter of 2013 decreased 4.32% compared to the quarter ended December 31, 2012.  

Salaries and employee benefit expenses decreased 10.79% compared to the fourth quarter ended December 31, 2012.  The primary reason for the decrease in expenses related to salaries and benefits was a decrease in full-time equivalent employees.  Total personnel was reduced by 5.8% in the third quarter of 2013 and an additional reduction of 5.9% in the fourth quarter of 2013, compared to staffing levels at the beginning of 2013.  

Expenses related to Other Real Estate Owned ("OREO") decreased by 81.01% when compared to the previous quarter and increased 43.64% when compared to the quarter ended December 31, 2012. Changes in the level of OREO related expenses is determined by the volume of OREO properties recorded during the reporting periods, valuation allowances associated with the fair market value of the properties, the condition and maintenance of the properties and losses incurred on the sale of properties. 

Advertising expenses decreased 31.34% from the quarter ended December 31, 2012.  Advertising expenses are cyclical and are impacted by product offerings and promotions, new financial service center locations and community outreach. 

Asset Quality

Asset quality improved throughout 2013, which resulted in the decline in the allowance for loan losses to total loans held for investment to 1.83% at December 31, 2013 compared to 2.02% at December 31, 2012.  

Loans that were delinquent for more than 90 days and still accruing interest decreased 22.61% to $808,000 at December 31, 2013 from $1.04 million at December 31, 2012.

Non-accrual loans decreased 8.83% to $19.75 million at December 31, 2013 from $21.66 million at December 31, 2012.  Troubled debt restructurings that were performing as agreed were $4.67 million at December 31, 2013 compared to $5.13 million at December 31, 2012 representing a decrease of 8.97%.  Other Real Estate Owned (OREO) was $3.42 million at December 31, 2013 compared to $9.93 million at December 31, 2012, representing a decrease of 65.56% since December 31, 2012.  Total non-performing assets were $28.66 million or 2.33% of total assets at December 31, 2013, compared to $37.77 million or 3.05% of total assets at December 31, 2012.

Net loan charge-offs during the fourth quarter of 2013 were $172,000 compared to net loan charge-offs of $237,000 for the previous quarter and $911,000 for the quarter ended December 31, 2012.

Total Assets

Total assets at December 31, 2013 remained relatively unchanged compared to December 31, 2012.

Total loans held for investment increased $19.00 million or 2.68% from December 31, 2012.  The securities portfolio (excluding restricted stock) increased 2.81%, compared to December 31, 2012.  Balances of mortgages held for sale decreased $48.94 million or 59.60%, compared to December 31, 2012.  Bank owned life insurance increased $5 million during the fourth quarter 2013.  Cash balances and deposits at other banks increased 23.76%, compared to December 31, 2012.

Deposits and Other Borrowings

Total deposits increased $496,000 or 0.05% since December 31, 2012.  FHLB advances were $80.0 million at December 31, 2013, an increase of $2.09 million since December 31, 2012. 

Equity and Capital

Shareholders' equity at December 31, 2013 was $112.94 million, compared to $113.93 million at December 31, 2012.  Retained earnings at December 31, 2013 were $51.06 million compared to $46.24 million at December 31, 2012.  The book value of the Company's common stock at December 31, 2013 was $15.95 per share compared to $16.15 at December 31, 2012.  Shareholders' equity declined in 2013 as a result of decreases in accumulated other comprehensive income (AOCI) resulting from unrealized losses in available for sale securities.   The Company's dividend of $0.07 per share remained unchanged from the previous quarter and increased from $0.05 per share for the quarter ended December 31, 2012.

The Company's total risk-based capital ratio increased to 15.88% as of December 31, 2013 from 15.83% at September 30, 2013 and 15.35% from December 31, 2012.  The Tier 1 risk-based capital ratio increased from 14.58% at September 30, 2013 to 14.62% at December 31, 2013 and increased from 14.09% at December 31, 2012.  The Tier 1 Leverage Ratio increased to 9.42% at December 31, 2013 from 9.36% at September 30, 2013 and 9.10% at December 31, 2012.  

As depicted in the following table, the Company's risk-based capital ratios remain well above regulatory minimum capital ratios:

Risk-Based Capital Ratios

December 31, 2013


(1)






Regulatory
Minimum
Requirement


MFC Ratios


MFC Excess
over Minimum

Tier 1 Leverage Ratio

4.0%


9.42%


5.42%

Tier 1 Risk-Based Capital Ratio

4.0%


14.62%


10.62%

Total Risk-Based Capital Ratio

8.0%


15.88%


7.88%

(1) Under the regulatory framework for prompt corrective action.

Caution about Forward Looking Statements

Certain information contained in this discussion may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements relate to the Company's future operations and are generally identified by phrases such as "the Company expects," "the Company believes" or words of similar import.  Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. For details on factors that could affect expectations, see the risk factors and other cautionary language included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, and other filings with the Securities and Exchange Commission. 

About Middleburg Financial Corporation

Middleburg Financial Corporation is headquartered in Middleburg, Virginia and has two wholly owned subsidiaries, Middleburg Bank and Middleburg Investment Group, Inc. Middleburg Bank serves communities in Virginia with financial centers in Ashburn, Gainesville, Leesburg, Marshall, Middleburg, Purcellville, Reston,  Richmond, Warrenton and Williamsburg. Middleburg Investment Group owns Middleburg Trust Company, which is headquartered in Richmond, Virginia with offices in Middleburg, Alexandria and Williamsburg. Middleburg Financial Corporation is also the majority owner of Southern Trust Mortgage, which is based in Virginia Beach and provides mortgages through offices in Virginia, Maryland, Georgia, North Carolina, and South Carolina.

 

MIDDLEBURG FINANCIAL CORPORATION

Consolidated Balance Sheets

(In thousands, except for share and per share data)








(Unaudited)


(Unaudited)


(Audited)


December 31,
2013


September 30, 2013


December 31,
2012

ASSETS






Cash and due from banks

$

6,648



$

9,417



$

7,139


Interest-bearing deposits with other institutions

60,695



53,228



47,276


Total cash and cash equivalents

67,343



62,645



54,415


Securities available for sale, at fair value

328,423



328,378



319,457


Loans held for sale

33,175



41,855



82,114


Restricted securities, at cost

6,780



7,005



6,990


Loans receivable, net of allowance for loan losses of $13,320, $13,382 and $14,311 respectively

715,160



702,724



695,166


Premises and equipment, net

20,017



20,465



20,587


Goodwill and identified intangibles

5,846



5,889



6,017


Other real estate owned, net of valuation allowances of $398, $603 and $1,707,
respectively

3,424



4,530



9,929


Prepaid federal deposit insurance

-



-



3,015


Bank owned life insurance

21,955



16,851



16,484


Accrued interest receivable and other assets

26,130



24,985



22,607


TOTAL ASSETS

$

1,228,253



$

1,215,327



$

1,236,781








LIABILITIES






Deposits:






Non-interest bearing demand deposits

$

185,577



$

190,680



$

167,137


Savings and interest bearing demand deposits

528,879



495,348



522,740


Time deposits

267,940



272,538



292,023


Total deposits

982,396



958,566



981,900


Securities sold under agreements to repurchase

34,539



35,005



33,975


Short-term borrowings

-



5,451



11,873


FHLB borrowings

80,000



85,000



77,912


Subordinated notes

5,155



5,155



5,155


Accrued interest payable and other liabilities

10,723



10,967



8,844


Commitments and contingent liabilities

-



-



-


TOTAL LIABILITIES

1,112,813



1,100,144



1,119,659








SHAREHOLDERS' EQUITY






Common stock ($2.50 par value; 20,000,000 shares authorized, 7,080,591, 7,089,091 and 7,052,554 issued and outstanding, respectively)

17,403



17,403



17,357


Capital surplus

44,251



44,139



43,869


Retained earnings

51,056



50,063



46,235


Accumulated other comprehensive income

232



833



6,467


Total Middleburg Financial Corporation shareholders' equity

112,942



112,438



113,928


Non-controlling interest in consolidated subsidiary

2,498



2,745



3,194


TOTAL SHAREHOLDERS' EQUITY

115,440



115,183



117,122


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,228,253



$

1,215,327



$

1,236,781


 

 

MIDDLEBURG FINANCIAL CORPORATION

Consolidated Statements of Income

(In thousands, except for per share data)



(Unaudited)


(Unaudited)


For the Three Months Ended
December 31,


For the Twelve Months Ended
December 31,


2013


2012


2013


2012

INTEREST AND DIVIDEND INCOME








Interest and fees on loans

$

8,744



$

9,330



$

35,248



$

37,895


Interest and dividends on securities available for sale








Taxable

1,638



1,432



6,105



6,408


Tax-exempt

638



604



2,555



2,403


Dividends

63



58



232



193


Interest on deposits in banks and federal funds sold

31



36



132



124


Total interest and dividend income

11,114



11,460



44,272



47,023


INTEREST EXPENSE








Interest on deposits

1,094



1,449



4,911



6,916


Interest on securities sold under agreements to repurchase

82



82



325



332


Interest on short-term borrowings

17



81



123



392


Interest on FHLB borrowings and other debt

311



295



1,208



1,184


Total interest expense

1,504



1,907



6,567



8,824


NET INTEREST INCOME

9,610



9,553



37,705



38,199


Provision for loan losses

110



1,281



109



3,438


NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

9,500



8,272



37,596



34,761


NON-INTEREST INCOME








Service charges on deposit accounts

593



572



2,291



2,197


Trust services income

1,033



923



3,970



3,751


Gains on loans held for sale

3,114



5,926



15,652



21,014


Gains (losses) on securities available for sale, net

22



(7)



418



445


Total other-than-temporary impairment losses

-



-



-



(46)


Portion of loss recognized in other comprehensive income

-



-



-



46


Net impairment losses

-



-



-



-


Commissions on investment sales

107



129



470



518


Fees on mortgages held for sale

-



43



103



186


Bank owned life insurance

104



96



472



459


Other operating income

430



299



1,163



884


Total non-interest income

5,403



7,981



24,539



29,454


NON-INTEREST EXPENSE








Salaries and employee benefits

7,385



8,278



30,627



30,417


Net occupancy and equipment expense

1,857



1,785



7,269



7,050


Advertising

436



635



1,457



2,034


Computer operations

485



471



1,860



1,572


Other real estate owned

79



55



1,455



2,721


Other taxes

186



202



751



813


Federal deposit insurance expense

139



269



822



1,050


Other operating expenses

2,635



2,103



9,300



8,602


Total non-interest expense

13,202



13,798



53,541



54,259


Income before income taxes

1,701



2,455



8,594



9,956


Income tax expense

436



387



2,064



1,966


NET INCOME

1,265



2,068



6,530



7,990


Net (income) loss attributable to non-controlling interest

224



(647)



(9)



(1,504)


Net income attributable to Middleburg Financial Corporation

$

1,489



$

1,421



$

6,521



$

6,486


Earnings per share:








Basic

$

0.21



$

0.20



$

0.92



$

0.92


Diluted

$

0.21



$

0.20



$

0.92



$

0.92


Dividends per common share

$

0.07



$

0.05



$

0.24



$

0.20




MIDDLEBURG FINANCIAL CORPORATION
Quarterly Summary Statements of Income
(In thousands, except for per share data)



For the Three Months Ended




December 31,




September 30,




June 30,




March 31,




December 31,


INTEREST AND DIVIDEND INCOME


2013




2013




2013




2013




2012


Interest and fees on loans

$

8,744



$

8,744



$

8,795



$

8,965



$

9,330


Interest and dividends on securities available for sale









Taxable

1,638



1,468



1,468



1,531



1,432


Tax-exempt

638



640



646



630



604


Dividends

63



59



54



56



58


Interest on deposits in banks and federal funds sold

31



43



29



30



36


Total interest and dividend income

11,114



10,954



10,992



11,212



11,460


INTEREST EXPENSE










Interest on deposits

1,094



1,190



1,253



1,373



1,449


Interest on securities sold under agreements to repurchase

82



82



81



80



82


Interest on short-term borrowings

17



59



18



29



81


Interest on FHLB borrowings and other debt

311



303



299



295



295


Total interest expense

1,504



1,634



1,651



1,777



1,907


NET INTEREST INCOME

9,610



9,320



9,341



9,435



9,553


Provision for (recovery of) loan losses

110



3



184



(188)



1,281


NET INTEREST INCOME AFTER PROVISION
FOR (RECOVERY OF) LOAN LOSSES

9,500



9,317



9,157



9,623



8,272


NON-INTEREST INCOME










Service charges on deposit accounts

593



590



574



534



572


Trust services income

1,033



963



1,014



960



923


Gains on loans held for sale

3,114



4,162



4,483



3,893



5,926


Gains (losses) on securities available for sale, net

22



23



326



47



(7)


Commissions on investment sales

107



159



110



94



129


Fees on mortgages held for sale

-



28



58



17



43


Bank owned life insurance

104



125



123



120



96


Other operating income

430



78



392



263



299


Total non-interest income

5,403



6,128



7,080



5,928



7,981


NON-INTEREST EXPENSE










Salaries and employee benefits

7,385



7,750



7,692



7,799



8,278


Net occupancy and equipment expense

1,857



1,820



1,787



1,805



1,785


Advertising

436



318



435



268



635


Computer operations

485



456



458



461



471


Other real estate owned

79



416



142



820



55


Other taxes

186



186



187



192



202


Federal deposit insurance expense

139



149



270



265



269


Other operating expenses

2,635



2,210



2,137



2,318



2,103


Total non-interest expense

13,202



13,305



13,108



13,928



13,798


Income before income taxes

1,701



2,140



3,129



1,623



2,455


Income tax expense

436



491



774



363



387


NET INCOME

1,265



1,649



2,355



1,260



2,068


Net (income) loss attributable to non-controlling interest

224



(38)



(262)



67



(647)


Net income attributable to Middleburg Financial
Corporation

$

1,489



$

1,611



$

2,093



$

1,327



$

1,421


 



MIDDLEBURG FINANCIAL CORPORATION
Key Statistics
(Unaudited, Dollars in thousands, except for per share data)




For the Three Months Ended



December 31,




September 30,




June 30,




March 31,




December 31,




2013




2013




2013




2013




2012


Net Income

$

1,489



$

1,611



$

2,093



$

1,327



$

1,421


Earnings per share, basic

$

0.21



$

0.23



$

0.30



$

0.19



$

0.20


Earnings per share, diluted

$

0.21



$

0.23



$

0.29



$

0.19



$

0.20


Dividend per share

$

0.07



$

0.07



$

0.05



$

0.05



$

0.05












Return on average total assets - QTD

0.48

%


0.52

%


0.69

%


0.44

%


0.46

%

Return on average total equity - QTD

5.20

%


5.71

%


7.25

%


4.71

%


4.96

%

Dividend payout ratio

33.32

%


30.43

%


16.88

%


26.57

%


24.82

%

Non-interest revenue to total revenue (1)

35.89

%


39.58

%


41.96

%


38.40

%


45.54

%











Net interest margin (2)

3.43

%


3.33

%


3.40

%


3.45

%


3.42

%

Yield on average earning assets

3.94

%


3.89

%


3.97

%


4.08

%


4.08

%

Cost of average interest-bearing liabilities

0.66

%


0.71

%


0.72

%


0.78

%


0.82

%

Net interest spread

3.28

%


3.18

%


3.25

%


3.30

%


3.26

%











Non-interest income to average assets (3)

1.76

%


2.00

%


2.23

%


1.93

%


2.62

%

Non-interest expense to average assets (3)

4.33

%


4.33

%


4.34

%


4.57

%


4.53

%











Efficiency ratio - QTD (Tax Equivalent) (4)

85.06

%


81.19

%


78.35

%


80.96

%


76.51

%

 

(1)

Excludes securities gains and losses.

(2)

The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets.  Tax equivalent net interest income is calculated by grossing up interest income for the amounts that are non-taxable (i.e., municipal income) then subtracting interest expense. The tax rate utilized is 34%. The Company's net interest margin is a common measure used by the financial service industry to determine how profitably earning assets are funded.  Because the Company earns non-taxable interest income due to the mix in its investment and loan portfolios, net interest income for the ratio is calculated on a tax equivalent basis as described above.  This calculation excludes net securities gains and losses.

(3)

Ratios are computed by dividing annualized income and expense amounts by quarterly average assets. Excludes securities gains and losses.

(4)

The efficiency ratio is not a measurement under accounting principles generally accepted in the United States.  It is calculated by dividing non-interest expense (adjusted for amortization of intangibles, other real estate expenses, and non-recurring one-time charges) by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investment portfolio.  The tax rate utilized in calculating tax equivalent amounts is 34%. The Company calculates and reviews this ratio as a means of evaluating operational efficiency.  

 

 



MIDDLEBURG FINANCIAL CORPORATION
Selected Financial Data by Quarter
(Unaudited, Dollars in thousands, except for per share data)

















December 31,



September 30,



June 30,



March 31,



December 31,



2013



2013



2013



2013



2012


BALANCE SHEET RATIOS















Loans to deposits (including HFS)

77.53

%


79.07

%


80.29

%


79.01

%


80.62

%

Portfolio loans to deposits

74.15

%


74.71

%


73.50

%


73.97

%


72.26

%

Average interest-earning assets to average interest-bearing liabilities

126.87

%


126.23

%


125.09

%


123.60

%


124.17

%

PER SHARE DATA










Dividends

$

0.07



$

0.07



$

0.05



$

0.05



$

0.05


Book value (MFC Shareholders)

15.95



15.86



15.93



16.28



16.15


Tangible book value (3)

15.13



15.03



15.09



15.41



15.30


SHARE PRICE DATA










Closing price

$

18.04



$

19.28



$

19.10



$

19.41



$

17.66


Diluted earnings multiple (1)

19.61



20.96



16.47



25.54



22.08


Book value multiple (2)

1.11



1.21



1.20



1.19



1.09


COMMON STOCK DATA










Outstanding shares at end of period

7,080,591



7,089,091



7,089,598



7,051,587



7,052,554


Weighted average shares O/S , basic - QTD

7,096,260



7,080,244



7,072,587



7,051,009



7,052,554


Weighted average shares O/S, diluted - QTD

7,130,272



7,118,208



7,102,670



7,082,354



7,069,603


CAPITAL RATIOS










Capital to assets - common shareholders

9.20

%


9.25

%


9.28

%


9.46

%


9.21

%

Capital to assets - w/non-controlling interest

9.40

%


9.48

%


9.50

%


9.70

%


9.47

%

Tangible common equity ratio (4)

8.76

%


8.81

%


8.83

%


9.01

%


8.77

%

Leverage ratio

9.42

%


9.36

%


9.32

%


9.11

%


9.10

%

Tier 1 risk based capital ratio

14.62

%


14.58

%


14.15

%


14.35

%


14.09

%

Total risk based capital ratio

15.88

%


15.83

%


15.41

%


15.60

%


15.35

%

CREDIT QUALITY










Net charge-offs to average total loans

0.02

%


0.03

%


0.01

%


0.08

%


0.12

%

Total non-performing loans to total portfolio loans

3.46

%


3.63

%


3.76

%


3.59

%


3.92

%

Total non-performing assets to total assets

2.33

%


2.51

%


2.80

%


2.77

%


3.05

%

Non-accrual loans to:










total portfolio loans

2.71

%


2.87

%


2.88

%


2.80

%


3.05

%

total assets

1.61

%


1.69

%


1.67

%


1.65

%


1.75

%

Allowance for loan losses to:










total portfolio loans

1.83

%


1.87

%


1.93

%


1.89

%


2.02

%

non-performing assets

46.48

%


43.86

%


39.88

%


40.22

%


37.89

%

non-accrual loans

67.44

%


65.20

%


66.82

%


67.48

%


66.06

%

NON-PERFORMING ASSETS










Loans delinquent 90+ days and still accruing

$

808



$

636



$

829



$

812



$

1,044


Non-accrual loans

19,752



20,525



20,376



20,019



21,664


Restructured loans (not in non-accrual)

4,674



4,820



5,366



4,854



5,132


OREO and repossessed assets

3,424



4,530



7,570



7,904



9,929


Total non-performing assets

$

28,658



$

30,511



$

34,141



$

33,589



$

37,769


ALLOWANCE FOR LOAN LOSS SUMMARY










Balance at the beginning of the period

$

13,382



$

13,616



$

13,508



$

14,311



$

13,941


Loans charged off - QTD

241



291



128



721



1,060


Recoveries - QTD

(69)



(54)



(52)



(106)



(149)


Net charge-off loans - QTD

172



237



76



615



911


Provision for (recovery of) loan losses

110



3



184



(188)



1,281


Balance at the end of the period

$

13,320



$

13,382



$

13,616



$

13,508



$

14,311


 

(1)

The diluted earnings multiple is calculated by dividing the period's closing market price per share by the annualized diluted earnings per share for the period.  The diluted earnings multiple is a measure of how much an investor may be willing to pay for $1.00 of the Company's earnings.

(2)

The book value multiple (or price to book ratio) is calculated by dividing the period's closing market price per share by the period's book value per share.  The book value multiple is a measure used to compare the Company's market value per share to its book value per share.

(3)

Tangible book value is not a measurement under accounting principles generally accepted in the United States. It is computed by subtracting identified intangible assets and goodwill from total Middleburg Financial Corporation shareholders' equity and then dividing the result by the number of shares of common stock issued and outstanding at the end of the accounting period.

(4)

The tangible common equity ratio is not a measurement under accounting principles generally accepted in the United States.  It is computed by subtracting identified intangible assets and goodwill from total Middleburg Financial Corporation shareholders' equity and total assets and then dividing the adjusted shareholders' equity balance by the adjusted total asset balance.

 

 


MIDDLEBURG FINANCIAL CORPORATION
Average Balances, Income and Expenses, Yields and Rates




For the Three Months Ended December 31,


2013


2012


Average
Balance


Income/
Expense


Yield/Rate
(2)


Average
Balance


Income/
Expense


Yield/Rate
(2)

ASSETS












Securities:












Taxable

$

275,208



$

1,701



2.45

%


$

260,039



$

1,490



2.28

%

Tax-exempt (1)

64,315



966



5.96

%


63,839



915



5.70

%

Total securities

$

339,523



$

2,667



3.12

%


$

323,878



$

2,405



2.95

%

Loans:












Taxable

$

759,513



$

8,738



4.56

%


$

767,248



$

9,325



4.84

%

Tax-exempt (1)

655



9



5.45

%


537



8



5.93

%

Total loans (3)

$

760,168



$

8,747



4.57

%


$

767,785



$

9,333



4.84

%

Interest-bearing deposits with other institutions

51,671



31



0.24

%


56,262



36



0.25

%

Total earning assets

$

1,151,362



$

11,445



3.94

%


$

1,147,925



$

11,774



4.08

%

Less:  allowance for loan losses

(13,267)







(14,112)






Total non-earning assets

81,162







84,132






Total assets

$

1,219,257







$

1,217,945


















LIABILITIES












Interest-bearing deposits:












Checking

$

329,590



$

195



0.23

%


$

335,174



$

255



0.30

%

Regular savings

110,443



58



0.21

%


105,625



60



0.23

%

Money market savings

76,197



40



0.21

%


72,503



48



0.26

%

Time deposits:












$100,000 and over

132,994



345



1.03

%


147,214



533



1.44

%

Under $100,000

134,773



456



1.34

%


142,305



553



1.55

%

Total interest-bearing deposits

$

783,997



$

1,094



0.55

%


$

802,821



$

1,449



0.72

%

Short-term borrowings

2,022



16



3.14

%


7,326



81



4.40

%

Securities sold under agreements to repurchase

36,227



82



0.90

%


34,563



82



0.94

%

FHLB borrowings and subordinated debt

85,264



312



1.45

%


79,752



295



1.47

%

Total interest-bearing liabilities

$

907,510



$

1,504



0.66

%


$

924,462



$

1,907



0.82

%

Non-interest bearing liabilities












Demand deposits

185,409







169,313






Other liabilities

10,023







6,341






Total liabilities

$

1,102,942







$

1,100,116






Non-controlling interest

2,649







3,792






Shareholders' equity

113,666







114,037






Total liabilities and shareholders' equity

$

1,219,257







$

1,217,945


















Net interest income (1)



$

9,941







$

9,867




Interest rate spread





3.28

%






3.26

%

Cost of funds





0.55

%






0.69

%

Interest expense as a percent of average earning assets





0.52

%






0.66

%

Net interest margin





3.43

%






3.42

%

 

(1)

 Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.

(2)

All yields and rates have been annualized on a 365 day year for 2013 and a 366 day year for 2012.

(3)

Total average loans include loans on non-accrual status.

 


MIDDLEBURG FINANCIAL CORPORATION
Average Balances, Income and Expenses, Yields and Rates




For the Twelve Months Ended December 31,


2013


2012


Average
Balance


Income/
Expense


Yield/Rate (2)


Average
Balance


Income/
Expense


Yield/Rate (2)

ASSETS












Securities:












Taxable

$

268,954



$

6,337



2.36

%


$

262,991



$

6,601



2.51

%

Tax-exempt (1)

66,396



3,870



5.83

%


62,363



3,642



5.84

%

Total securities

$

335,350



$

10,207



3.04

%


$

325,354



$

10,243



3.15

%

Loans:












Taxable

$

755,913



$

35,224



4.66

%


$

755,790



$

37,890



5.01

%

Tax-exempt (1)

679



37



5.45

%


135



8



5.93

%

Total loans (3)

$

756,592



$

35,261



4.66

%


$

755,925



$

37,898



5.01

%

Interest-bearing deposits with other institutions

56,436



132



0.23

%


54,237



124



0.23

%

Total earning assets

$

1,148,378



$

45,600



3.97

%


$

1,135,516



$

48,265



4.25

%

Less:  allowance for loan losses

(13,643)







(14,830)






Total non-earning assets

80,856







84,279






Total assets

$

1,215,591







$

1,204,965


















LIABILITIES












Interest-bearing deposits:












Checking

$

324,171



$

852



0.26

%


$

322,715



$

1,271



0.39

%

Regular savings

110,210



243



0.22

%


105,768



350



0.33

%

Money market savings

75,899



171



0.23

%


64,517



204



0.32

%

Time deposits:












$100,000 and over

139,018



1,671



1.20

%


143,687



2,200



1.53

%

Under $100,000

140,230



1,974



1.41

%


165,703



2,891



1.74

%

Total interest-bearing deposits

$

789,528



$

4,911



0.62

%


$

802,390



$

6,916



0.86

%

Short-term borrowings

3,565



123



3.45

%


8,725



392



4.49

%

Securities sold under agreements to repurchase

35,536



325



0.91

%


34,177



332



0.97

%

FHLB borrowings and subordinated debt

86,767



1,208



1.39

%


83,655



1,184



1.42

%

Total interest-bearing liabilities

$

915,396



$

6,567



0.72

%


$

928,947



$

8,824



0.95

%

Non-interest bearing liabilities












Demand deposits

175,942







156,057






Other liabilities

7,357







6,503






Total liabilities

$

1,098,695







$

1,091,507






Non-controlling interest

2,824







2,828






Shareholders' equity

114,072







110,630






Total liabilities and shareholders' equity

$

1,215,591







$

1,204,965


















Net interest income (1)



$

39,033







$

39,441




Interest rate spread





3.25

%






3.30

%

Cost of funds





0.60

%






0.81

%

Interest expense as a percent of average earning assets





0.57

%






0.78

%

Net interest margin





3.40

%






3.47

%

































(1)

 Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%.

(2)

All yields and rates have been annualized on a 365 day year for 2013 and a 366 day year for 2012.

(3)

Total average loans include loans on non-accrual status.

 

©2012 PR Newswire. All Rights Reserved.

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